Phony Brand Names Aggravate Trade Ills

September 29, 1985|By Anne Groer, Sentinel Washington Bureau

WASHINGTON — From Rome to Rio, from Hoboken to Hong Kong, commercial counterfeiting is a big business, perhaps earning as much as $20 billion a year and still growing. In this country alone, said a congressional expert, as many as 200,000 American jobs may have been lost to overseas counterfeiters who flood U.S. markets with fake products and drive stateside factories out of business.

President Reagan last week blamed counterfeiting for contributing to this country's record $150 billion foreign trade deficit and vowed it would be a target of his new crackdown on unfair trade practices.

The products are as varied as the places they are made.

Five blocks from the White House, street vendors do a brisk trade in Gucci T-shirts and sweatshirts. But the ''Made in Pakistan'' labels inside the collars strongly suggest that the sportswear was made by someone other than the Italian leather company.

In Miami last week, U.S. Customs Service agents seized 25,000 counterfeit watches. They included bogus Cartiers, Rolexes and Piagets, which sell for up to $10,000, and the more trendy Swatch watches, which sell for $25 to $50.

But perhaps the most audacious of the bogus timepieces were those bearing the brown and yellow trademark monogram of Louis Vuitton, the French purveyor of expensive luggage and leather goods. Vuitton does not make watches.

In New York, G.D. Searle Co., the pharmaceutical giant, is suing two medical wholesalers for distributing 55,000 packets of phony birth control pills that may have been too weak to prevent conception.

Searle officials say they don't believe any women got pregnant while taking the counterfeit Ovulen-21, which was seized last winter by the FBI after an alert pharmacist noticed that Searle was misspelled on some tablets.

Even in the communist Peoples Republic of China, closet capitalists are cranking out cheap copies of designer clothing and music tapes for workers craving a bit of Western culture. Chinese consumers with more pragmatic or parochial taste can buy copies of domestic-brand bicycles.

But far more frightening than diverted revenue, lost jobs, trademark theft and balance of pay- ments is the fact that many of the fakes are potential killers. A number of these lethal look-alikes

were cited in a 1984 report by the House Commerce Committee's panel on investigations and oversight:

-- More than 350 heart pumps used to keep patients alive during open heart surgery were recalled by the Food and Drug Administration in 1978 because an $8 part in the $200 mechanism was a substandard counterfeit.

-- Brake linings in some English transit buses would have failed after only six or seven brakings, but were discovered before they could cause a crash.

-- Fake Bell helicopter parts were believed responsible for several accidents, while other counterfeit parts ordered for the space shuttle and an Army missile system were discovered before installation.

''Any American who drives a car, flies in an aircraft or depends upon a wide range of medical devices, pharmaceuticals or personal car products is placed in jeopardy because of substandard and dangerous foreign counterfeit products,'' said Rep. John Dingell, D-Mich., chairman of the House Commerce Committee.

The list of counterfeit items is long and will get longer, say law enforcement and industry sources, because whatever can be manufactured can be faked.

While the bogus items may not be identical to their higher-priced and better-made namesakes, most are close enough either to fool the average consumer or to satisfy a yearning for jet-set symbols at bargain basement prices.

''Of course I know it's fake,'' said a well-dressed Washington woman as she handed a street vendor $32 for a lavender ''Gucci'' sweatshirt. ''But I think it's kind of a giggle.''

It is not, of course, amusing to the Gucci family, or to Calvin Klein, Ralph Lauren or any of the dozens of other designers who spend millions of dollars annually to produce, advertise and market their products.

For the past few years, manufacturers of everything from sunglasses to computer microchips have tried to fight back. This has not been easy since product counterfeiting became a criminal offense only last fall. Until then, prosecutors had to go through a complicated civil procedure to stop sales and collect fines.

But last year Reagan signed three laws designed to make it easier to punish corporations and people who counterfeit merchandise and semiconductor chips.

Since 1978, about 300 companies have banded together under the umbrella of the International Anti-Counterfeiting Coalition to exchange information and lobby for tougher U.S. and international penalties.

Coalition president Jim Bikoff has asked the Reagan administration to review preferential trade agreements with Taiwan, Korea, Singapore, the Philippines, Mexico and Brazil because their policies not only encourage counterfeiting but lead to ''the exploitation, cheating and even physical endangerment of millions of consumers.''